Williams Company computed its cost per equivalent unit for direct materials to be $2.60 and its cost per equivalent unit for conversion to be $3.75. A total of 250,000 units of product were completed and transferred out as finished goods during the month. The ending Work in Process inventory consists of 36,000 equivalent units of direct materials and 36,000 equivalent units of conversion costs. The amount that should be reported in ending Work in Process Inventory is:
A) $228,600.
B) $93,600.
C) $1,816,100.
D) $135,000.
E) $1,587,500.

Question

Quizplus · Accepted Answer

To calculate the cost of ending Work in Process inventory, we need to multiply the equivalent units of direct materials and conversion costs by their respective costs per equivalent unit and add them together.

For direct materials:

36,000 equivalent units x $2.60 = $93,600

For conversion costs:

36,000 equivalent units x $3.75 = $135,000

Adding these two amounts together gives us a total of $228,600, which is the amount that should be reported in ending Work in Process inventory. Therefore, the best choice is A.

Williams Company Computed Its Cost Per Equivalent Unit for Direct